Prices of zero-coupon bonds rise over time, providing a rate of appreciation equal to the internal,...

Prices of zero-coupon bonds rise over time, providing a rate of appreciation equal to the internal, compounded rate of return. Zero coupon bonds are also the vehicles of choice in constructing a yield curve and are oftentimes estimated, when a zero is not readily available, by a treasury strip.

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Zero Coupon BOnds are issued at discount to face value, and its price rises to face value as it goes towards maturity, sometimes it is used to contruct yield curve.

jeff jeffy answered 1 year ago

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